New Mountain Guardian IV Sees Strong Income Growth, Unrealized Losses Mount

TL;DR

**New Mountain Guardian IV is growing income and deleveraging, but watch those unrealized losses – they could bite.**

AI Summary

New Mountain Guardian IV Income Fund, L.L.C. reported a net increase in members' capital from operations of $19.872 million for the nine months ended September 30, 2025, up from $13.192 million for the same period in 2024. Total investment income significantly increased to $32.138 million for the nine months ended September 30, 2025, compared to $17.833 million in the prior year, driven by higher interest income. Net investment income rose to $23.233 million from $12.683 million year-over-year. However, the fund experienced a net change in unrealized depreciation of investments of $3.332 million for the nine months ended September 30, 2025, a reversal from $0.505 million in unrealized appreciation in 2024. Total assets grew to $451.768 million as of September 30, 2025, from $399.912 million at December 31, 2024, primarily due to an increase in non-controlled/non-affiliated investments at fair value to $432.413 million. Borrowings decreased substantially to $12.500 million from $58.000 million, while total liabilities fell to $28.436 million from $65.570 million. Members' capital increased to $423.332 million from $334.342 million, with common units outstanding rising to 42,529,615 from 33,306,325.

Why It Matters

For investors, the significant increase in net investment income and total assets suggests robust operational performance and growth in the fund's underlying portfolio. However, the shift from unrealized appreciation to depreciation on investments, totaling a $3.332 million loss, indicates potential valuation challenges or market volatility impacting the fund's holdings, which could affect future returns. The substantial reduction in borrowings from $58.000 million to $12.500 million improves the fund's financial leverage and reduces interest rate risk, making it more resilient. This competitive positioning, coupled with increased capital contributions, signals investor confidence despite market headwinds, but the unrealized losses warrant close monitoring.

Risk Assessment

Risk Level: medium — The fund exhibits medium risk due to a significant net change in unrealized depreciation of investments, totaling $3.332 million for the nine months ended September 30, 2025, a stark contrast to the $0.505 million unrealized appreciation in the prior year. While net investment income is strong at $23.233 million, this unrealized depreciation indicates potential valuation issues or market sensitivity in its investment portfolio, which could impact future performance and capital. The lack of a public market for its units also limits liquidity for investors.

Analyst Insight

Investors should scrutinize the underlying reasons for the $3.332 million net change in unrealized depreciation of investments. While the fund shows strong net investment income growth and reduced leverage, understanding the specific assets contributing to these unrealized losses is crucial for assessing long-term portfolio health and potential future write-downs. Consider this a 'hold' with a watchful eye on portfolio valuations.

Financial Highlights

debt To Equity

0.03

revenue

$32.138M

operating Margin

76.7%

total Assets

$451.768M

total Debt

$12.500M

net Income

$19.872M

eps

$0.47

gross Margin

N/A

cash Position

$15.011M

revenue Growth

+80.8%

Revenue Breakdown

Key Numbers

• $451.768M — Total assets (Increased from $399.912 million at December 31, 2024)
• $19.872M — Net increase in members' capital from operations (For the nine months ended September 30, 2025, up from $13.192 million in 2024)
• $32.138M — Total investment income (For the nine months ended September 30, 2025, up from $17.833 million in 2024)
• $23.233M — Net investment income (For the nine months ended September 30, 2025, up from $12.683 million in 2024)
• $3.332M — Net change in unrealized depreciation of investments (For the nine months ended September 30, 2025, a reversal from $0.505 million appreciation in 2024)
• $12.500M — Borrowings (BMO Subscription Line) (Decreased from $58.000 million at December 31, 2024)
• $423.332M — Total members' capital (Increased from $334.342 million at December 31, 2024)
• 42,529,615 — Common units outstanding (Increased from 33,306,325 units at December 31, 2024)
• $9.95 — Members' capital per unit (As of September 30, 2025, down from $10.04 at December 31, 2024)
• $8.186M — Distribution payable (As of September 30, 2025, up from zero at December 31, 2024)

Key Players & Entities

• New Mountain Guardian IV Income Fund, L.L.C. (company) — registrant
• BMO Subscription Line (company) — borrowing facility
• Anaplan, Inc. (company) — portfolio company
• Associations Finance, Inc. (company) — portfolio company
• Viper Bidco, Inc. (company) — portfolio company
• Wealth Enhancement Group, LLC (company) — portfolio company
• OEConnection LLC (company) — portfolio company
• Coupa Holdings, LLC (company) — portfolio company
• Einstein Parent, Inc. (company) — portfolio company
• USRP Holdings, Inc. (company) — portfolio company

FAQ

Risk Factors

• Investment Value Fluctuations [high — market]: The fund experienced a net change in unrealized depreciation of investments of $3.332 million for the nine months ended September 30, 2025, a significant reversal from $0.505 million in unrealized appreciation in the same period of 2024. This indicates a negative market impact on the value of the fund's investments.
• Leverage Reduction [medium — financial]: Borrowings decreased substantially from $58.000 million at December 31, 2024, to $12.500 million as of September 30, 2025. While this reduces financial risk, it also implies a change in the fund's capital structure and potentially its investment strategy.
• Increased Operating Expenses [medium — financial]: Total expenses increased to $8.905 million for the nine months ended September 30, 2025, from $5.150 million in the prior year. This rise is largely due to increased interest and other financing expenses ($2.786M vs $1.479M) and income-based incentive fees ($2.567M vs $1.409M).

Industry Context

The New Mountain Guardian IV Income Fund operates in the private credit and alternative investment space, focusing on income generation. The industry is characterized by increasing demand for yield in a low-interest-rate environment, leading to greater competition and a search for diversified income streams. Funds like this often invest in middle-market companies, providing debt financing.

Regulatory Implications

As a limited liability company, the fund is subject to regulations governing investment vehicles, including disclosure requirements under securities laws. Changes in tax laws or accounting standards could also impact its operations and reporting. The fund's reliance on investment income and market valuations means it is sensitive to economic conditions and regulatory shifts affecting financial markets.

What Investors Should Do

1. Monitor unrealized depreciation trends.
2. Analyze the drivers of increased investment income.
3. Evaluate the impact of reduced leverage.
4. Assess the increase in operating expenses.

Key Dates

• 2025-09-30: Nine months ended September 30, 2025 — Reported significant growth in total investment income ($32.138M vs $17.833M) and net investment income ($23.233M vs $12.683M), but also a net change in unrealized depreciation of $3.332M.
• 2024-09-30: Nine months ended September 30, 2024 — Reported lower total investment income ($17.833M) and net investment income ($12.683M), but had unrealized appreciation of $0.505M.
• 2025-09-30: Total assets reached $451.768M — Represents an increase from $399.912M at December 31, 2024, driven by growth in non-controlled/non-affiliated investments.
• 2025-09-30: Borrowings reduced to $12.500M — Significant decrease from $58.000M at December 31, 2024, indicating deleveraging.
• 2025-09-30: Common units outstanding increased to 42,529,615 — Growth from 33,306,325 units at December 31, 2024, suggesting capital inflows or unit issuance.

Glossary

PIK interest income

Payment-in-kind interest income, where interest is paid in the form of additional debt or equity rather than cash. (This is a component of the fund's investment income, contributing $583,000 for the nine months ended September 30, 2025.)

Non-controlled/non-affiliated investments at fair value

Investments in entities where the fund does not have control or affiliation, valued at their current market price. (This is the largest asset class for the fund, totaling $432.413 million as of September 30, 2025, and is the primary driver of asset growth.)

Accumulated underdistributed (overdistributed) earnings

The cumulative difference between earnings generated by the fund and the distributions made to members. (This account shows a negative balance of ($1.474M) as of September 30, 2025, indicating that earnings have been distributed at a higher rate than they were generated, or that unrealized losses have impacted retained earnings.)

Common units outstanding

The total number of ownership units issued by the fund that are currently held by investors. (The increase in common units outstanding from 33,306,325 to 42,529,615 suggests capital is being raised or reinvested.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period, New Mountain Guardian IV Income Fund has seen a substantial increase in total investment income, rising by 80.8% to $32.138 million, primarily driven by higher interest income. Net investment income also grew significantly by 83.2% to $23.233 million. However, the fund experienced a negative shift in investment valuation, with a net change in unrealized depreciation of $3.332 million, a reversal from $0.505 million in appreciation. Total assets have grown to $451.768 million, while total liabilities have decreased substantially due to a significant reduction in borrowings from $58.000 million to $12.500 million.

Filing Documents

• nmg4if-20250930.htm (10-Q) — 6003KB
• nmg4income-9302025xex311.htm (EX-31.1) — 9KB
• nmg4income-9302025xex312.htm (EX-31.2) — 9KB
• nmg4income-9302025xex321.htm (EX-32.1) — 4KB
• nmg4income-9302025xex322.htm (EX-32.2) — 4KB
• 0001976719-25-000019.txt ( ) — 17291KB
• nmg4if-20250930.xsd (EX-101.SCH) — 68KB
• nmg4if-20250930_cal.xml (EX-101.CAL) — 51KB
• nmg4if-20250930_def.xml (EX-101.DEF) — 385KB
• nmg4if-20250930_lab.xml (EX-101.LAB) — 688KB
• nmg4if-20250930_pre.xml (EX-101.PRE) — 461KB
• nmg4if-20250930_htm.xml (XML) — 3504KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements 3 4 5 6 Schedule of Investments as o f September 30, 2025 (unaudited) 7 Schedule of Investments as of December 31, 2024 25 Notes to the Financial Statements of New Mountain Guardian IV Income Fund, L.L.C. (unaudited) 41 Report of Independent Registered Public Accounting Firm 62 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 63 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 76 Item 4.

Controls and Procedures

Controls and Procedures 77

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 78 Item 1A.

Risk Factors

Risk Factors 78 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 78 Item 3. Defaults Upon Senior Securities 78 Item 4. Mine Safety Disclosures 78 Item 5. Other Information 78 Item 6. Exhibits 79

Signatures

Signatures 80 2 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements New Mountain Guardian IV Income Fund, L.L.C. (in thousands, except units and per unit data) (unaudited) September 30, 2025 December 31, 2024 Assets Non-controlled/non-affiliated investments at fair value (cost of $ 433,646 and $ 375,695 , respectively) $ 432,413 $ 377,794 Cash and cash equivalents 15,011 19,551 Interest and dividend receivable 3,047 2,446 Other assets 1,297 121 Total assets $ 451,768 $ 399,912 Liabilities Borrowings BMO Subscription Line $ 12,500 $ 58,000 Deferred financing costs (net of accumulated amortization of $ 416 and $ 334 , respectively) ( 2 ) ( 88 ) Net borrowings 12,498 57,912 Distribution payable 8,186 — Payable for unsettled securities purchased 5,098 4,837 Income based incentive fee payable 932 777 Management fee payable 818 705 Interest payable 282 390 Payable to affiliate 96 305 Accrued capital gains incentive fee — 142 Other liabilities 526 502 Total liabilities 28,436 65,570 Commitments and contingencies (See Note 8) Members' Capital Common units, 42,529,615 and 33,306,325 units issued and outstanding, respectively 424,806 332,573 Accumulated underdistributed (overdistributed) earnings ( 1,474 ) 1,769 Total members' capital $ 423,332 $ 334,342 Total liabilities and members' capital $ 451,768 $ 399,912 Members' capital per unit $ 9.95 $ 10.04 The accompanying notes are an integral part of these financial statements. 3 Table of Contents New Mountain Guardian IV Income Fund, L.L.C. (in thousands, except units and per unit data) (unaudited) Three Months Ended Nine Months Ended September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 Investment income Interest income (excluding Payment-in-kind ("PIK") interest income) $ 10,596 $ 7,434 $ 30,192 $ 15,491 PIK interest income 195 248 583 644 Dividend income 119 6 352 6 Fee income 417 653 1,011 1,692 Tota

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